Connected TV (CTV) describes any type of TV that can be connected to the internet and can stream digital video. This medium is gaining popularity fast, in fact, an IAS Streaming Wars report shows that CTV has become almost universally adopted. Now, 88% of consumers have access to a connected TV.
As CTV becomes a more widespread mode of media consumption, digital marketers are taking notice—but with a little bit of hesitancy. And we get it! For starters, the term CTV can be a bit ambiguous, which makes it tough to communicate the value of investing ad dollars in CTV. Thankfully, we know how to overcome this.
In our recent survey of over 200 agency and brand advertising decision makers we found that this is just one of the concerns that brands and agencies have about CTV advertising. We conducted this CTV report in partnership with ad industry business intelligence firm Advertiser Perceptions to learn about this concern, and others.
To help clear up the confusion about CTV, we’re exploring 6 important truths about CTV that you should know. And to spice things up, we’re including 1 common lie about this channel—so that we can explain why it’s a misconception.
CTV and OTT Are Related but Not the Same
According to our recent CTV report, 75% of marketers believe that CTV is a cutting-edge way for them to promote their brands. But before diving into this channel, it’s important to understand the terminology that describes it. The terms “CTV” and “over-the-top” (OTT) are often used synonymously. This can be confusing for anyone in digital marketing because while they are related, CTV and OTT aren’t the same thing.
Connected TV is a subset of OTT, which includes apps and services that do not require subscriptions to traditional cable or pay-TV services. This means that OTT is the method for delivering video content, and CTV is the device on which a viewer sees that content.
Connected TV Ads Aren’t Skippable
We’re happy to confirm that no, CTV ads cannot be skipped! When watching CTV, a viewer isn’t able to fast forward an ad, or switch channels if they want to watch their content without the ads. The experience of watching CTV is immersive and relaxed, and it’s reminiscent of the experience of watching traditional television. Because of this, viewers accept the ads as being part of the ecosystem—this makes them more willing to watch them.
There are some streaming services that do offer ad-free viewing experiences for an extra fee. While this feature is available, 4 out of 5 CTV viewers in the U.S. and 7 out 10 in Europe opt to stick with ad-supported content. Most of the viewers in both regions say that they prefer to watch free-to-view programming versus paying to watch the same content without ads.
CTV Doesn’t Overlap With Linear TV Buys
Today, linear TV advertisers are moving more of their dollars from demographic-based buying, typical of linear TV, to audience-based buying. This was confirmed in our CTV report which found that 51% of respondents are increasing their allocation toward audience-based buying. While linear TV can offer advertisers massive reach, it does not allow for specific audience and household targeting, which enables brands to offer hyper-relevant ads to their target audience.
CTV enables more precise targeting and data, as it leverages the same programmatic targeting capabilities as other digital channels—this enables advertisers to better reach the right consumers. These benefits are a great incentive for investing more in CTV, even if it means moving some dollars away from linear. We expect that the upward trend of putting ad dollars toward CTV will continue. With this shift there will be less duplication between CTV and linear buys.
CTV Reaches Several Demographics
CTV has generally been associated with younger viewers, but that is changing. With more time spent at home during the pandemic, viewers of every age have been embracing CTV. For example, in 2020 we saw a notable increase in baby boomers’ adoption and viewership compared to the previous year. Now, 80% of U.S. households have at least one CTV device which means that CTV is reaching viewers of all ages.
This broad demographic reach is valuable for advertisers because CTV viewers are highly engaged. They’ve made the choice to watch the programming in front of them, and aren’t skipping the ads. Our CTV report further found that CTV gives marketers the opportunity to reach younger demographics like millennials and Gen Z—who are harder to reach through traditional media. And with programmatic CTV advertising, you have the ability to layer into your targeting demographics and interests.
CTV Inventory Isn’t Fragmented
Back in the day, fragmentation was a common criticism of cable TV. But this early criticism eventually evolved into being considered an advantage! Fragmentation means competition, which can lower prices because platforms have price as their best lever to secure ad dollars.
Too many CTV providers is a concern for some, but experienced advertisers report that fragmentation isn’t a significant issue. Advertisers will benefit from the competition creating a buyer’s market, and the more inventory that is available, the more opportunity there is to reach viewers. And, CTV has many benefits that ultimately outweigh the perceived negative impacts of fragmentation.
CTV Inventory is High Quality
Just like any other format offerings in programmatic advertising, there are different types of inventory available for CTV advertising. Inventory ranges from remnant to high-quality opportunities. There are many premium opportunities to run ads, along popular TV shows and movies and in front of invested audiences during prime hours.
As CTV advertising continues growing, CTV ad supported services that only transacted in direct buys are making their inventory readily available programmatically. They can be accessed through both private marketplaces and the open exchange.
CTV Isn’t Worth Investing In
Yes, you guessed it! This is a lie. CTV advertising is absolutely worth investing in.
According to our CTV report, a majority of marketers have been advertising on CTV for under 3 years. So while CTV has been around for over a decade, many brands are late to the game. Much of this is likely because of the common concerns around CTV: audience quality, transparency, brand safety and there being too many CTV providers.
These concerns can be overcome through education as well as test-and-learn opportunities. And putting in the effort to address concerns is worth it because the value of CTV will continue to grow. According to eMarketer, households with a connected TV device will climb to 87% by 2025.
By understanding the truths about CTV, you can better choose a DSP that offers the functionality you need for your CTV campaigns. And, having a handle on these truths will enable you to expand your agency offerings and create digital campaigns that reach their full potential.
We’ve released a comprehensive guide covering the connected TV opportunity for independent agencies who are looking to thrive in 2021. Get your copy of the report, Connected TV, The Independent Agency Opportunity, here.